Padron v. Lopez

• Decision Date: 25 November 2009
• Docket Number: No. 100,763.,100,763.
• Citation: 220 P.3d 345
• Parties: Orlando PADRON and HLMP Aviation Corp., Appellants, v. Hernan LOPEZ; PTC Aviation Corporation; 1st Source Bank; and John Doe, Defendants, and Dodson International Parts, Inc.; and Dodson Aviation, Inc., Appellees.
• Court: Kansas Supreme Court

220 P.3d 345

Orlando PADRON and HLMP Aviation Corp., Appellants, v. Hernan LOPEZ; PTC Aviation Corporation; 1st Source Bank; and John Doe, Defendants, and Dodson International Parts, Inc.; and Dodson Aviation, Inc., Appellees.

No. 100,763.

Supreme Court of Kansas.

November 25, 2009.

W. Joseph Hatley, of Spencer Fane Britt & Browne LLP, of Kansas City, Missouri, argued the cause, and Gardiner B. Davis, of the same firm, and Blaine Finch, of Green & Finch Chartered, of Ottawa, were with him on the briefs for appellants Orlando Padron and HLMP Aviation Corp.

Laura L. McConwell, of McConwell Law Offices, of Mission, argued the cause, and Edward A. McConwell, of the same firm, was with her on the brief for appellees Dodson International Parts, Inc., and Dodson Aviation, Inc.

The opinion of the court was delivered by LUCKERT, J.:

This appeal arises from a district court's decision to quash the registration and attempted enforcement of a Florida temporary injunction, filed under the Uniform Enforcement of Foreign Judgments Act (Foreign Judgments Act), K.S.A. 60-3001 et seq. We affirm this decision, holding that an ex parte temporary injunction is not entitled to full faith and credit because it is a prejudgment, temporary order. Therefore, it is not subject to enforcement under either the Foreign Judgments Act or the Full Faith and Credit Clause of the United States Constitution, Article 4, § 1. We further hold that the district court erred in examining the merits of the underlying action, considering a counterclaim, and entering an injunction and other orders because the Foreign Judgments Act grants only limited subject matter jurisdiction for the purpose of enforcing a foreign judgment. Finally, we conclude the district court did not abuse its discretion in refusing to recognize the foreign judgment as a matter of comity because the Florida order is contrary to the public policy of this state.

FACTUAL AND PROCEDURAL BACKGROUND

The foreign judgment at issue in this case was entered in an action filed on March 18, 2008, in the Circuit Court of Miami-Dade County, Florida. The Florida action was filed by Orlando Padron, a resident of Florida, and HLMP Aviation Corporation, a Delaware corporation jointly owned by Padron and Hernan Lopez. (For ease of reference the plaintiffs will be collectively referred to as Padron.) The named defendants in the Florida action were Lopez, a resident of Florida; PTC Aviation Corporation, a Florida corporation; Dodson International Parts, Inc., and Dodson Aviation, Inc., a/k/a Dodson International (collectively referred to as Dodson), both Kansas corporations; and 1st Source Bank, a "USA Indiana licensed banking institution." Padron alleged that Lopez, PTC, and Dodson conspired to defraud Padron into organizing and investing capital in HLMP Aviation and then used the capital to purchase the Beech 200 Model Aircraft that is the focus of this case. At the time the Florida action was filed, Dodson, which is in the business of repairing aircraft, had possession of the aircraft in Kansas and had performed repairs on the aircraft.

In the Florida action, Padron obtained an ex parte temporary order that enjoined the defendants "from selling, transferring, transporting, encumbering, auctioning, and operating" the aircraft. Further, the Florida temporary injunction ordered those in possession of the aircraft to transfer possession of the aircraft to Padron or Padron's agents "upon presentation of this Order" and authorized the relocation of the aircraft to Dade County, Florida. The Florida court indicated that the ex parte temporary injunction was being "granted without notice to the Defendants to prevent the Aircraft from being sold or transferred to third parties." Although the order became effective upon the filing of a bond, the Florida order further provided: "The Defendants and all interested parties may petition this Court for relief from this Temporary Injunction as provided for under the Florida Rules of Civil Procedure and applicable Florida Law." Under Rule 1.610 of the Florida Rules of Civil Procedure, 31 Fla. Stat. R.C.P. Rule 1.610 (2004), a party against whom an ex parte temporary injunction has been entered may move to dissolve or modify a temporary injunction. A hearing must be scheduled within 5 days of that motion.

The day after the ex parte temporary injunction was entered in the Florida action, Padron filed a "Notice of Filing of Foreign Judgment" pursuant to the Foreign Judgments Act, K.S.A. 60-3001 et seq., in Franklin County, Kansas, where Dodson possessed the aircraft while performing repairs. Attached to the notice were copies of the Florida ex parte temporary injunction and a notice that Padron had posted a $450,000 injunction bond in Florida. Within hours of the filing, Padron's agents, with the assistance of the Franklin County Sheriff, removed the aircraft from Dodson's possession.

Later that same day, Dodson filed a "Motion to Quash Foreign Judgment." A few days later, Dodson filed an amended motion in which it expanded on its arguments. In both motions, Dodson alleged the Florida court did not have personal jurisdiction over Dodson and was without authority to enter the injunction. Dodson also asserted a mechanic's lien pursuant to K.S.A. 58-201 and alleged that Padron's removal of the aircraft jeopardized Dodson's possessory mechanic's lien and its ability to collect the amounts it was owed for parts and services related to the repair of the aircraft. Finally, Dodson asserted the judgment should be quashed because a bond had not been posted in Franklin County District Court as required by K.S.A. 60-901, the Kansas injunction statute. In the amended motion, Dodson requested that

"the court immediately quash the temporary injunction for lack of jurisdiction and failure to post the required bond and order [Padron] to return the aircraft to the possession of [Dodson] in the State of Kansas. If the court declines to quash the temporary injunction, [Dodson] request[s] that the court issue a stay of the injunction, return the aircraft to the possession of [Dodson], and order the aircraft to remain in [Dodson's] possession until such time as the matter can be more fully heard. If possession [of the aircraft] is not returned to [Dodson, it] requests that the court require a bond in an appropriate amount to be filed...."

Attached to the amended motion were affidavits of the president of Dodson Aviation and the chief financial officer of Dodson International Parts, Inc. The affidavits supported Dodson's argument that its Kansas corporations were not subject to the Florida court's jurisdiction; each affiant stated that the corporations were not registered to do business in Florida and had not done business in Florida. Attached to the Dodson Aviation president's affidavit was a copy of Dodson's mechanic's lien that had been filed with the Franklin County Register of Deeds.

While Dodson objected to the Kansas action and filed pleadings in the Kansas case to quash the temporary injunction, no steps were taken in Florida to modify the ex parte temporary injunction. However, another defendant in the Florida action—1st Source Bank—filed a motion seeking an increased injunction bond. The Florida court granted this motion and required an additional $800,000 to be posted. Padron complied on April 30, 2008, and filed a notice in the Franklin County action reporting the filing of the additional bond.

Meanwhile, several hearings were conducted in the Kansas proceeding. On April 1, 2008, the Franklin County District Court granted Dodson's motion to quash and found that the Franklin County Sheriff had not been given the authority in Kansas to seize the aircraft. Even though the district court granted Dodson's prayer to quash the foreign judgment, it also granted Dodson's alternative prayers by entering orders requiring the return of the aircraft to Kansas or the posting of an injunction bond in the Franklin County District Court that was specifically designated for the satisfaction of Dodson's lien. The journal entry reflecting these orders was entered on April 4, 2008.

By April 8, 2008, Padron had not returned the aircraft or posted a bond in Kansas, leading Dodson to file a motion seeking an order to show cause why Padron should not be held in contempt of court. On April 15, 2008, Padron filed a motion for rehearing. In Padron's memorandum of support, Padron argued, inter alia, that the district court erred in quashing the Florida injunction because the court failed to find any procedural defect in the filing of the foreign judgment in Kansas and, to the extent the district court's ruling was based on an implicit finding of no personal jurisdiction over Dodson in Florida, the district court erred. Padron asserted that the Florida court merely ordered the return of the aircraft pending final adjudication of the underlying matter, which would not impair Dodson's ability to challenge jurisdiction in Florida or to raise other defenses in the Florida lawsuit.

In addition, Padron raised a challenge based on jurisdiction, arguing Padron had consented to jurisdiction in Kansas only for the limited purpose of making the foreign judgment valid and "ripe" for enforcement in Kansas. Padron contended that once the district court set aside the Florida injunction and declined to give it full faith and credit, there was no basis to subject Padron to the general jurisdiction of the Kansas court for purposes of issuing additional orders.

At the hearing on the contempt motion, the district court first denied Padron's motion for rehearing. The court reiterated that the Florida injunction failed to comply with either K.S.A. 60-903 or K.S.A. 60-905 and that those statutes required Padron to post a bond in Kansas. The court reasoned that a bond must be posted in Kansas because K.S.A. 60-3002 requires that "any foreign judgment would be subject to the same procedures, defenses and...